Annexation
By Dale Dickson
PERRY-HOCKING EDUCATIONAL SERVICE CENTER
1605 Airport Road
New Lexington, Ohio 43764
740-342-3502
Report on Northern Local School District’s Resolution to Annex to Muskingum Valley E.S.C. and Perry-Hocking Educational Service Center’s Position Statement on the Matter.
Background
On April 28, 2008, Superintendent Jack Porter of the Northern Local School District requested a meeting with Superintendent Dale Dickson of the Perry-Hocking Educational Service Center to announce that Northern Local Schools would be filing a resolution to annex to the Muskingum Valley E.S.C. as of July 1, 2010. In said meeting Superintendent Porter was complimentary of Superintendent Dickson and the work of the Perry-Hocking E.S.C. and offered no reason for the annexation other than “Northern Local is an odd ball in Perry County and we fit better with the districts in Muskingum County.” He further explained that Northern Local had no interest in receiving services from Fairfield County as they “had nothing in common with Fairfield County school districts and did not care to play J.V. to Pickerington.” The Perry-Hocking E.S.C. has, for four years, been exploring the potential of partnerships and mergers with Fairfield County (the local, city and exempted village superintendents served by Perry-Hocking E.S.C. were fully aware of such exploration and at no time expressed disagreement with such a study). This was the first time Superintendent Porter had ever expressed any form of disagreement to an association with Fairfield County. Superintendent Dickson expressed that he believed such a move by Northern Local Schools to be a mistake citing that the costs would be higher for like services and Northern Local’s control over funds would be reduced. He also expressed that this would have a negative affect on the other districts in the consortium. Superintendent Porter responded “I can’t be concerned with the other districts in the consortium…my concern is Northern Local.” Once again, no valid reason was offered for such a move on Northern Local’s part. And with no reason given, no negotiations, or opportunity for Perry-Hocking E.S.C. to resolve any issues Northern had with services or price, took place.
Superintendent Porter had notified Superintendent Dickson earlier in the school year that he was going to “shop services” in the area. When Superintendent Dickson asked why, Superintendent Porter responded, “because we can.” No reason was given as to why Northern Local was interested in shopping. Superintendent Dickson took this to mean that there may be some services, not offered by the Perry-Hocking E.S.C., that Northern may buy from another E.S.C. This was not perceived as a problem as the Perry-Hocking E.S.C. has always been open for districts to purchase services from other E.S.C.s if they were not available locally. Also, the Perry-Hocking E.S.C. has been a willing partner with other E.S.C.s to offer services, not currently provided to our districts, at a cost effective price. Furthermore, it was not perceived to be a problem for Northern to “shop services” as the costs for services offered by the Perry-Hocking E.S.C. are very competitive for our area. A simple comparison of salary schedules, insurance rates and total costs for like services will reveal that this move by Northern Local will be more costly to the district.
Richard Murray, Superintendent of the Muskingum Valley E.S.C. contacted Superintendent Dickson, upon Northern Local’s inquiry to their agency, to communicate that Northern Local had contacted him about services, making clear that he had not approached Northern Local. Superintendent Murray, on several other occasions, expressed to Superintendent Dickson that he believed Northern Local was serious about buying services from Muskingum Valley E.S.C. Superintendent Dickson asked if any reasons were given as to why they were looking. Superintendent Murray said “No.” He did offer that “Moves like this often are about relationships.” Superintendent Dickson explained that he believed the relationship between Perry-Hocking E.S.C. and Northern Local Schools was a good one. Superintendent Dickson explained that “the Perry-Hocking E.S.C. has provided every service ever requested by Northern Local Schools at a competitive price.” Superintendent Dickson inquired about the possibility of merger with the Muskingum Valley E.S.C. and Superintendent Murray, although willing to consider the implications of a merger with his leadership team, did not believe a merger with PHESC would be an option. His reasons were: 1) He had no interest in changing the make-up of his governing board, 2) The MVESC Governing Board was not happy with the fact that Perry County did not merge with them when given the opportunity in 1997, and 3) He did not want to assume the liability associated with staffing and finances a merger brings as opposed to each district deciding to annex to MVESC on their own.
The issue of Northern Local School’s resolution to annex to Muskingum Valley E.S.C. was placed on the agenda for the May 13th meeting of the Perry-Hocking E.S.C. Superintendents’ Association. At said meeting Superintendent Dickson recapped the April 28th meeting discussion with the members present (Dr. Larry Rentschler, Superintendent, New Lexington City Schools; Jeff Childers, Superintendent, Crooksville Exempted Village Schools; Steve Stirn, Superintendent, Logan-Hocking Local Schools; Jack Porter, Superintendent, Northern Local Schools; Don Halsey, Interim Superintendent, Southern Local Schools, and Jenny O’Hare, Asst. Superintendent, Perry-Hocking E.S.C.). A discussion ensued during which Superintendent Rentschler asked Superintendent Porter why they were making such a move. Superintendent Porter adamantly responded, “I do not owe you or anyone else at this table an explanation.” He further stated to the group, “And let me tell you fellows another thing…..Muskingum Valley E.S.C. tried to get me to contact each of you to get you to come along with us and I told them No! I am only concerned about Northern Local.” Again, no explanation of why such a move by Northern Local was even being considered, let alone such a bold action as resolving to move without so much as a negotiation with the current service provider. The Superintendents’ Association then agreed that Superintendent Dickson would explore options for continued services to member districts.
In dealing with this issue no Perry-Hocking Educational Service Center personnel have taken action to discredit Northern Local School District personnel, Muskingum Valley E.S.C. personnel or any other stakeholders in the matter. Superintendent Dickson has maintained his position in staying on the “high road” in dealing with this matter. The Perry-Hocking E.S.C. has not contacted newspapers; however, when called by the newspapers, Superintendent Dickson answered the reporters’ questions in a truthful manner and notified Superintendent Porter of Northern Local each time he had received a call from the papers. Superintendent Dickson also had a conversation with Superintendent Porter regarding rumors that were spreading that the two of them were at odds with each other and the two agreed there were no personal differences between them.
Following the May Superintendents’ Association meeting, Superintendent Dickson worked with his E.S.C. Governing Board and staff to develop strategies to deal with the potential annexation of the Northern Local Schools by Muskingum Valley E.S.C. Superintendent Dickson recommended to the governing board and staff that we keep our focus on serving the needs of children and school districts in our area saying, “No good for our children, our school districts, or our E.S.C. can come from creating wars and burning bridges.” The Governing Board agreed. During the months of June, July and August Superintendent Dickson met with superintendents from other E.S.C.s, Ohio Educational Service Center Association Director Craig Burford, local superintendents’ association, and the E.S.C. staff and board to develop options for the Perry-Hocking E.S.C. Superintendent Dickson and the Perry-Hocking E.S.C. Governing Board believe that there needs to be consensus among the remaining four school districts for the E.S.C. to properly determine a solid direction for the agency.
Options
1. Encourage negotiations with Northern Local Schools to attempt to identify areas in which the Perry-Hocking E.S.C. can better meet their needs. The Perry-Hocking E.S.C. has always been, and continues to be, open to suggestions for improving our service structure, financial structure and personnel to better meet the needs of school districts and improve student achievement.
2. Re-organize the Perry-Hocking E.S.C. to maintain quality services for the remaining school districts in Perry and Hocking Counties while off-setting the loss of base funds (per pupil and supervisory funds) that will be taken from our E.S.C. by Northern Local to Muskingum Valley E.S.C. should the annexation be approved. This can be accomplished through a reduction of full-time staff and the development of part-time specialized service personnel.
3. Form an alliance, or partnership, with other E.S.C.s to share service responsibilities throughout a larger area. Discussions are already being held with other E.S.C. leaders to develop such an alliance.
4. Negotiate a merger agreement with another E.S.C. for the remaining four E.S.C.s in the Perry-Hocking E.S.C. service area.
5. Help each remaining school district in the Perry-Hocking E.S.C. service area develop agreements with other E.S.C.s, of their choosing, to which they can annex through resolution to the State Board of Education. This would mean closing the Perry-Hocking E.S.C.
Considerations
1. The Perry-Hocking E.S.C. currently provides quality services and leadership to its member districts at a very competitive price.
2. The Northern Local School District has not provided a valid reason to justify a move to another E.S.C., nor have they attempted to negotiate with the current E.S.C. (Please note that in the State Board of Education Procedures for Considering Requests Pursuant to Ohio Revised Code Section 3311.059, Section I.A2 asks for “A statement from the local district which provides the reason it is seeking the proposed annexation and provides a description of the deliberative process the local board of education used to arrive at the decision to pursue annexation (e.g., prior negotiations with the current ESC, board considerations, etc.).
3. The Perry-Hocking E.S.C. employs 180 full and part-time staff to serve 22 locations and manages an $8.5 million budget annually. Over 70% of the PHESC staff resides in Perry County and 28% lives in the Northern Local School District.
4. There is no service the Northern Local School District could not obtain from the Muskingum Valley E.S.C. that could not be obtained by staying a member of the Perry-Hocking E.S.C. The Perry-Hocking E.S.C. has always been open to its member school districts purchasing services from other E.S.C.s if the same services were not offered or could not be developed effectively locally.
5. The Perry-Hocking E.S.C. does not seek profit. The PHESC has maintained a consistent carry-over balance of approximately $400,000 per year that is just enough to cover cash flow throughout the year.
6. All CAFS reimbursements received over the years were put directly back into services for the PHESC districts. No reserve was created with these funds as is the case with many other E.S.C.s. The Perry-Hocking E.S.C. did not profit from the CAFS program; but, instead returned these funds to its member districts in the form of services.
7. The Perry-Hocking E.S.C. has a very competitive salary schedule and benefits package compared with other E.S.C.s in the area including the Muskingum Valley E.S.C. Neither Northern Local Schools nor Muskingum Valley E.S.C. can provide the same services (currently provided to Northern Local Schools) at a lower cost. A simple comparison of salary schedules and insurance rates will support this fact. (Note: The PHESC has, since 2000, employed a 7% cost recovery fee as approved by the PHESC Superintendents’ Association. This fee was established to eliminate large fluctuations at the end of the year between estimates for services and actual costs. This fee simply recovers the direct and indirect E.S.C. funds expended for: materials and supplies (classrooms and service providers), professional development, mileage reimbursements, auditing fees, and like expenses that the districts and/or other E.S.C.s need to pay as well. Some E.S.C.s will estimate such costs as line items to be included in the district invoices and then charge a 4% or 5% fee on top of these costs. Some E.S.C.s expect to “profit” a certain amount each year to put back into research and development (i.e. An E.S.C. may have as a goal to “profit” one month’s payroll per year to create new services). The Perry-Hocking E.S.C. does not “profit.” The Perry-Hocking districts cannot afford this practice. Thus, PHESC only collects what is necessary to maintain enough carry-over to cover cash-flow needs. If a district desires to create a new service, the Perry-Hocking E.S.C. is perfectly capable of developing said service in a quality fashion at a competitive price, or PHESC will obtain the service through a partnership with another E.S.C. if that route proves more effective.
8. Currently, a Governing Board composed of seven elected members from Perry and Hocking Counties controls the $8.5 million budget. This budget includes funds from the state of Ohio, local district purchases of services and grant funded programs. Thus, local districts have control of these funds received and expended through these elected officials. By annexing to another E.S.C., a district must realize that they are giving up much control over these funds. In the case of Northern Local annexing to Muskingum Valley E.S.C., Northern Local will have no representation, as the MVESC has no obligation to add a representative to their board. After the next census the territory of the Northern Local Schools will be added to the Muskingum Valley E.S.C. and then citizens from Northern Local School District will be eligible to run for a board seat at large (unless new sub-divisions are created by the MVESC Governing Board.) Right now Northern Local Schools has two representatives on the Perry-Hocking E.S.C. Governing Board to address Northern’s interests. The Northern Local Schools upon annexation will indeed lessen their control over these funds.
9. The Perry-Hocking E.S.C. is more than willing to re-design and re-organize to help the districts within its service area (and indeed the region) receive the quality services they desire in the most cost effective manner. The Perry-Hocking E.S.C. has not been given an opportunity to address any concerns or desired changes the Northern Local Schools may have.
10. Since 1998, the Perry-Hocking E.S.C. has experienced growth that has benefited Perry and Hocking Counties in terms of employment and commerce. The PHESC has grown from 84 employees in 1998 to 180 employees in 2008, making them one of the largest employers in our counties. In that same time the budget for the PHESC has grown from $3 million to over $9 million and is expected to be in the neighborhood of $8 million in fiscal year 2009. The E.S.C. has thus been good for the area in creating jobs and increasing the flow of funds into the service area. And with over 85% of the employees living in the service area, these employees spend their income locally, thus helping the local economy. This growth has occurred despite many major financial set backs, for example: The state of Ohio removing the County Commissioners’ obligation to provide E.S.C.s with offices; no increases in the per pupil funding for E.S.C.s; utilities and maintenance; the loss of CAFS Medicaid Reimbursements on services provided to eligible children; the loss of the Regional Fiscal Agency; and most recently, a 10% cut in state funding for E.S.C.s. The PHESC has done its job in containing costs and maintaining quality services in a manner that benefits Perry and Hocking Counties.
Position Statement
It is the position of the Perry-Hocking Educational Service Center Governing Board, Superintendent Dale Dickson and staff that they respectfully disagree with the Northern Local School District’s decision to seek annexation to the Muskingum Valley E.S.C. The Perry-Hocking Educational Service Center would very much like to retain our friends at Northern Local as clients and keep Perry and Hocking counties whole as we strive to improve educational opportunities for our children. The costs for Northern Local to receive like services will be higher; no valid reasons for such a move have been given; Northern Local is free to purchase services from M.V.E.S.C. while staying a member of the P.H.E.S.C.; the P.H.E.S.C. has not had the opportunity to negotiate with Northern Local any changes in service or finance Northern Local may desire; a move of this nature represents a loss of local control over valuable funds; and funds from the state of Ohio and local taxpayers, currently received into the PHESC, will be sent outside our county, producing a negative impact on an already struggling local economy.
The Perry-Hocking E.S.C. respects the right of the Northern Local School District, and all school districts, to make decisions such as these; however, the Perry County Board of Education, having been in service to Perry County schools since 1914, certainly believes it should be given an opportunity to negotiate continued services to its Northern Local School District clients.
The Perry-Hocking Educational Service Center will continue to focus on providing the highest quality services at competitive costs to our member districts whatever option is selected for implementation. Improving educational opportunities for
children, and quality services to school districts, will remain the top priorities of the Perry-Hocking E.S.C. as we work with our member school districts through this process. We sincerely desire to do what is right for our educational system and the taxpayers who support that system.
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Dale L. Dickson, Superintendent Kathleen Sampson, Treasurer
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Maritta Walker, Board President Linda Remmert, Board Vice-President
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William Dunlap, Board Member John Skinner, Board Member
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Carolyn Nihiser, Board Member Debra Shaw, Board Member
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Mark Barrel, Board Member
